Ares Capital Corporation (NASDAQ:ARCC) is a sell. After rising more than ~17 percent in the last year, the business development company is now more than fairly valued. Though shares are no longer overbought, there is a significant risk of a correction in the high-yield sector. Once profit taking starts to set it, shares have a lot of downside. Considering that Ares Capital's shares are selling for a premium to Net Asset Value today, the reward-to-risk ratio is longer appealing.
Buy Low, Sell High
One reason why income investors want to think about selling high valuation business development companies is that investor sentiment has become too bullish these days.
